Multiple institutions are optimistic about China's asset structural opportunities

Recently, although volatility in global financial markets has increased, Chinese assets are showing unique resilience and allocation value. Many institutions believe that, thanks to China’s diversified energy mix, a well-developed industrial system, a stable economic and social environment, and the ongoing deepening of capital market reforms, the allocation value of Chinese assets amid global volatility has become increasingly prominent. The foundation for China’s A-share market to remain structurally favorable over the long term is still solid, and structural opportunities are accelerating.

Looking globally, multiple international institutions—including Goldman Sachs and UBS—have already issued clear bullish stances. In a statement released on March 31, Liu Jinjin, Goldman Sachs’ Chief China Equity Strategy Analyst, said he would still maintain a strategy of increasing holdings of A-shares and H-shares. Benefiting from Chinese companies’ continued efforts to improve return on shareholders’ net assets, cash returns, and the improvement of earnings per share in A-shares, it is expected that the overall profit growth rate for the A-share and H-share markets in 2026 could reach 10%. This expectation is supported jointly by factors such as artificial intelligence, “going global,” and “anti-involution” policy measures.

Fundamental support boosts confidence

Against the backdrop of broad pressure on global risk assets in the recent period, China’s stock market has shown positive changes in its capital structure. Zhang Yu, Chief Economist at Huachuang Securities, said that recently, despite widespread selling of global risk assets, China’s stock funds still managed to record a net inflow of $690 million in a single week (same as March 19 to March 25). Foreign capital and passive funds have become the main backstopping forces. Overseas capital saw a large net inflow of $1.38 billion in that week; combined with the return of $980 million from passive funds, this together formed the micro-level capital structure of the China stock fund market and created a backstopping force. This phenomenon indicates that Chinese assets are being continuously brought into the allocation view of global investors.

Fang Yi, Chief Strategy Analyst at Guotai Huarong Securities, believes that stability is the underlying tone of China’s economy and stock market. China has the world’s most complete industrial system, with manufacturing value added accounting for about 30% of the global share. The manufacturing system of “full industrial chain + efficient logistics + controllable costs” is upgrading from a mere “cost advantage” into a “stability anchor” within global supply chains. In past global risk events and demand shocks, China’s manufacturing industry has consistently demonstrated strong resilience.

In addition, improvements to China’s distinctive stock-market stabilization mechanisms enhance the market’s ability to withstand risks. Coupled with the risk diversification value brought by the low correlation between Chinese assets and global assets, it is expected to attract global capital. “In our recent communications with overseas long-term capital, we learned that foreign capital is re-examining China’s rise and industrial strengths,” Fang Yi said.

Yang Chao, Chief Strategy Analyst at Galaxy Securities, said in an interview with reporters from The Securities Journal (证券日报) that reforms in the opening year of the “15th Five-Year Plan and 5-year plan for the next period” (’十五五’) are being implemented steadily. A resonance has formed between the relocation of household wealth and the entry of long-term funds into the market, and the improvement in long-term capital supply has a degree of certainty. As A-share companies release their 2025 annual reports and 2026 Q1 reports in a concentrated manner, sectors with high earnings certainty and continuously improving business conditions will become the core direction that capital focuses on. Data show that from January to February 2026, profits of industrial enterprises above a designated size nationwide grew by 15.2%. Structurally, profit growth rates in upstream and midstream raw materials and AI hardware manufacturing industries are rising more noticeably. The profitability “center” for emerging technologies is expected to be further raised.

“China’s corporate fundamentals are showing a continuing trend toward improvement. Export structure is being upgraded continuously, and companies in high value-added areas are showing strong growth momentum. Chinese companies are accelerating their move toward the world, and overseas revenue is expected to become a new engine of profit growth,” Li Changfeng, head of market strategy at Bellway Fund, said in an interview with reporters from The Securities Journal.

AI and energy transformation become the main lines

Many institutions generally believe that China’s economic transformation and active industrial progress are the fundamental driving forces behind the sustained, steady development of China’s stock market. Among them, artificial intelligence and energy transformation have become the two main core themes, and structural opportunities in related areas are accelerating.

From a valuation and cost-effectiveness perspective, high-quality technology assets already have strong appeal for allocation. The latest viewpoint released by the office of UBS Wealth Management’s Chief Investment Officer shows that the market adjustment may already have been excessive, giving investors an opportunity to add to high-quality Chinese AI-related stocks at relatively low valuations. China’s internet industry currently has a 12-month forward price-to-earnings ratio of about 13x, which is approaching the level before DeepSeek was released; the current valuation has not yet fully reflected the gains generated by AI investment and monetization over the past year. It is expected that the MSCI China Index’s EPS (earnings per share) growth this year will be about 13%, with the technology sector’s earnings growth potentially reaching 20% to 25%. At the same time, the policy level still supports the development of AI and technological innovation. With fundamentals continuing to improve, profits, valuations, and positions are also expected to gradually recover.

In the long run, a re-rating of the valuation of Chinese assets is also an important positive factor. “The logic for re-rating Chinese assets driven by capital market reforms in this round has not changed,” Xia Fanji, a research and strategy analyst at Citic Securities, said.

In Liu Chenming’s view, Chief Strategy Analyst at Guangfa Securities, the regulatory authorities’ multi-pronged and continuous policy signals form a joint force. For example, on March 18, the Party Committee meeting of the People’s Bank of China held an expanded meeting and further emphasized “firmly maintaining the steady operation of financial markets such as stocks, bonds, and foreign exchange.” The structural strengths of Chinese assets and policy support still have resilience. The valuation “safety cushion” provides protection at the bottom; industrial upgrading and policy dividends provide upward driving force. In global asset reallocation, Chinese assets stand out with security advantages.

Goldman Sachs believes that artificial intelligence will continue to be the dominant theme in China’s stock market. In particular, at the global level, China has competitive advantages in fields such as electric power, infrastructure, and artificial intelligence, as well as in supply chains and large language models related to national security. After adjustments, A-shares and H-shares are expected to perform steadily, offering investors unique value in diversifying risk.

Li Changfeng also mentioned that whether it is “shovel sellers” for AI infrastructure or “users” for AI applications, Chinese companies are actively laying out plans. China’s relatively stable power infrastructure, in particular, provides a good development space for the AI industry ecosystem, and demand for China’s AI tokens (Token) is surging dramatically.

In fact, with a complete supply-chain system, a stable macro environment, and ongoing structural reforms, Chinese assets are gradually becoming an important direction toward which global capital seeks certainty. Zhang Jundong, a macro analyst in the research department of China International Capital Corporation (CICC), said that in the future, the safety attributes of Chinese assets will increasingly win favor from global capital.